Citing “opportunities in foreign circulation and ancillary bullion services,” the Royal Canadian Mint was able to overcome a decrease in numismatics revenue last year according to its 2018 annual report, which was released earlier this week.
Overall, the Mint reported a consolidated profit of $35.1 million – down from $36.1 million in 2017 – for the previous year. Sales of numismatic products also decreased in 2018 after the “Canada 150″ program concluded in 2017, resulting in a decrease in revenue of $55.4 million.
“The Mint has once again demonstrated its strength and resilience by outperforming its plan for 2018, even with a decrease in numismatics revenue, by seizing opportunities in foreign circulation and ancillary bullion services, while meeting its core obligation to reliably manage the production and distribution of Canada’s circulation coins,” said Marie Lemay, the Mint’s newly appointed president and CEO, who began at the helm of the Crown corporation this February.
“I look forward to leading a solution-driven organization, where our creative and committed staff continue to drive our profitability and sustainability.”
‘A CHALLENGING YEAR’
The Mint’s numismatic business “had a challenging year in 2018 and was not profitable,” said Jennifer Camelon, Mint CFO, in the recently released annual report.
“While our beautifully crafted collectible coins continue to delight people across Canada and around the world, the RCM recognized the need to develop an updated strategy to better support the business and ensure its future sustainability. At the heart of this new approach are our passionate customers and collectors. In 2019, we are positioned to earn more of their business by presenting a more relevant, yet smaller portfolio of products that tell uniquely Canadian stories that connect and captivate our customers. We look forward to sharing the early results of the plan later in 2019.”
The report adds the Mint’s newly re-focused numismatic business will have “a more customer-focused approach in how we serve our collectors, as well as more tailored products and experiences.”
“The revised strategy creates the pathway to sustainable profits by articulating and executing a new set of customer-facing choices that will stabilize the performance of the business and bring it closer to its best and most loyal premium and mainstream customers,” reads the annual report. “Renewed focus on creating distinct value for our premium and mainstream customers will require a different set of supporting structures and implementation activities across all areas of the business that are designed to deliver distinct premium and mainstream value propositions to market in a cost-effective way. Moving forward, sales and marketing will be fully integrated under the leadership of a new Chief Commercial Officer and our product plan will be initially smaller than it is today, focusing on those products that best meet the needs and preferences of our customers.”
FINANCIAL, OPERATIONAL HIGHLIGHTS
- Consolidated profit before income tax and other items increased to $46 million for the year (compared to $43.9 million in 2017).
- Consolidated profit for the period decreased to $35.1 million for the year (down from $36.1 million in 2017).
- Consolidated revenue decreased to $1.42 million in 2018 (down from $1.691 million in 2017) as lower overall bullion global market demand led to lower bullion volumes. Gold volumes were 523,000 ounces (down from 618,400 in 2017) while silver volumes were 18.4 million ounces (down slightly from 18.5 million in 2017).
- Sales of numismatic products decreased in 2018 after the Canada 150 program concluded in 2017, resulting in a decrease in revenue of $55.4 million.
- Foreign circulation revenue increased 48 per cent year over year as the production or shipments of foreign coins and blanks increased to 1.82 million in 2018 (compared to 1.522 million in 2017).
- After 2017 saw all circulating denominations redesigned in celebration of Canada 150, a smaller commemorative coin program in 2018, combined with reduced availability of recycled coins, resulted in decreased Canadian circulation net new coin production of 369 million pieces in the year (down from 560 million pieces in 2017).
- Operating expenses decreased 17 per cent year over year to $93.8 million (down from $113.2 million in 2017) mainly due to planned lower spending on marketing activities in 2018. Savings were further achieved through lower employee compensation expenses and the reduced cost of consolidating office workspace in Ottawa, the Mint’s report added.
- Cash increased to $66.4 million as of Dec. 31, 2018, from $56.3 million as of Dec. 31, 2017, remaining within the range of the level of cash required to support the Mint’s ongoing operations. In addition, the Mint declared and paid dividends to the Government of Canada in the amount of $10 million.